More Consultants Help Cut Costs As Some Firms Avoid Layoffs

More C-Suites are turning to management analysts to help them figure out how to become more productive and cost-effective in these hard times while causing the least commotion and harm.

Some turn to big-time consultants such as McKinsey or SAP. One small Houston firm, Acorn Systems, is seeing its consulting business grow 30 to 50 percent just in the past few months because of the recession and financial meltdown, CEO Leland Putterman told me.

He says that data mining has expanded in the past eight years so more relevant information can be collected about which employee contributes to the bottom line and which does not. "Instead of an X-Ray approach, we are more like an MRI approach," he told me, adding that management can them make up its minds about whether to fire or not. The firm's clients include Coca-Cola, PNC Financial Group and Lowe's.
Curiously, a number of firms are managing the recession without layoffs. Among them are Lincoln Electric, a Cleveland maker of welding products, which guarantees employment to all works with at least three years experience and hasn't had layoffs since 1949. Another is Hypertherm Inc., a Hanover, N.H. metal cutter that hasn't had layoffs in 40 years.

With such examples in mind, many firms may be shooting themselves in the foot by simply going to layoffs during these bad times. Layoffs come with their own extensive costs, including legal fees, severance, outplacement and so on. Yet other experts say that long-standing pay freezes and other alternatives to layoffs can be destructive as well because they tend to drive away talented employees.

In any event, consulants are back in vogue again as managers struggle to contain costs.